Companies & Sectors
Nokia sells handset, services business to Microsoft for 5.44 billion euro

Microsoft has agreed to a 10-year license arrangement to use the Nokia brand on current and subsequently developed products based on the Series 30 and Series 40 operating systems

Mobile handset maker Nokia Corp said it signed an agreement with Microsoft to sell all of its devices and services business and patient licences for 5.44 billion euro in cash, payable at closing the deal.

 

In a release, Nokia said it would to book a gain on sale of about 3.2 billion euro from the deal that is expected to close in first quarter of 2014.

 

Microsoft will acquire substantially all of Nokia's devices and services business, including the mobile phones and smart devices business units as well as an industry-leading design team, operations including all Nokia devices and services production facilities, devices & services-related sales and marketing activities, and related support functions. At closing, around 32,000 people are expected to transfer to Microsoft, including about 4,700 people in Finland.

 

However, Nokia's chief technology office (CTO) organization and patent portfolio will remain within the handset maker Group. The operations that are planned to be transferred to Microsoft generated an estimated 14.9 billion euro, or almost 50%, of Nokia's net sales for the full year 2012.

 

Microsoft has agreed to a 10-year license arrangement to use the Nokia brand on current mobile phones products. Nokia will continue to own and maintain the Nokia brand. Under the terms of the transaction, Microsoft has agreed to a 10-year license arrangement to use the Nokia brand on current and subsequently developed products based on the Series 30 and Series 40 operating systems.  Upon the closing of the transaction, Nokia would be restricted from licensing its brand for use in connection with mobile device sales for 30 months and from using the brand on its own mobile devices until 31 December 2015.

 

Following the transaction, Nokia said it plans to focus on its three established businesses NSN, its network infrastructure and services business; HERE, the mapping and location services business; and Advanced Technologies, the company's technology development and licensing business.

 

As part of the transaction, Nokia will grant Microsoft a 10 year non-exclusive license to its patents as of the time of the closing, and Microsoft will grant Nokia reciprocal rights related to HERE services. In addition, Nokia will grant Microsoft an option to extend this mutual patent agreement to perpetuity. Of the total purchase price of 5.44 billion euro, 3.79 billion euro relates to the purchase of substantially all of the devices and services business, and 1.65 billion euro relates to the mutual patent agreement and future option.

 

Additionally, Microsoft will become a strategic licensee of the HERE platform, and will separately pay Nokia for a four year license. This revenue stream is expected to substantially replace the revenue stream HERE is currently receiving from Nokia's devices and services business internally. If the transaction closes Microsoft is expected to become one of the top three customers of HERE.

 

Microsoft has agreed to make immediately available to Nokia 1.5 billion euro of financing in the form of three 500 million euro tranches of convertible bonds to be issued by Nokia maturing in five, six and seven years, respectively, the release said.

 

As of 2012, Nokia employed 101,982 people across 120 countries, conducted sales in more than 150 countries, and reported annual revenues of around 30 billion euro.

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